When a firm uses the allowance method to provide for losses for uncollectible accounts, the collection of an account previously written off as uncollectible requires an entry to A)decrease the balance of the Allowance for Doubtful Accounts. B)reduce the balance of Uncollectible Accounts Expense. C)increase the balance of the Sales account. D)reinstate the account receivable.

Question

Quizplus · Accepted Answer

When a previously written off account becomes collectible, it needs to be reinstated. This means that the entry should debit Accounts Receivable and credit Allowance for Doubtful Accounts (since the allowance was previously used to write off the account).

When a Firm Uses The Allowance Method to Provide for Losses